A Deep Dive Into Facebook’s Impact on Travel

by Jared Wein + Skift Team - Feb 2017

Skift Research Take

Facebook has transformed itself from a social media site into a powerful digital media platform that is now spreading its footprint across the travel industry. Facebook’s ability to dynamically retarget consumers combined with the ads being visual, aspirational, cost-effective, and largely in-app for Facebook’s massive and highly-engaged user base will make the platform an increasingly important tool for the travel industry.

Report Overview

Facebook, with its massive and engaged user base, gives travel companies the ability to both build brand awareness and target consumers at a granular level to drive bookings. Conversion should continue to improve with the new dynamic ads for travel retargeting consumers across devices. Facebook Messenger and WhatsApp dominate the messaging app world with both having over one billion users. While some are excited about a messaging evolution for booking, we take a more pragmatic view with messaging being more about enhancing the customer experience. This improved experience can build brand loyalty and drive future bookings. The report discusses the best use cases across the various sub-sectors of the travel industry as well as how we see direct and indirect monetization playing out. Google leads the market for digital advertising in travel, but Facebook is making a strong push into the space. While we fully expect Facebook to grow its travel market share in a meaningful way, Google will remain the dominant force in travel digital ad spending. Travel companies would love to reduce their reliance on Google, but it is premature to think of Facebook as being able to match Google’s footprint. This is not meant to minimize the importance of Facebook to the travel industry and the financial impact of travel on Facebook. Both will become significant. Instead, we make the argument that Facebook’s gains do not have to be a meaningful headwind for Google. We envision a world where both Google and Facebook benefit from the continued move from traditional advertising formats to digital. Google will continue to be the best functional tool at driving clicks to sites while Facebook is more visual and inspirational, but lacks the clear purchase intent of a Google search. Turning to the travel industry, competition for bookings amongst online travel companies themselves and between them and the hotels remains intense. Digital advertising will remain a crucial tool to drive traffic and conversions. This is a headwind for the travel industry, where ad spending growth is trending above revenue growth, but a nice tailwind for both Google and Facebook. We believe that Facebook’s vast reach and impact on travel makes this report a valuable read for participants and investors across online travel, lodging, air travel, and tours and activities. At approximately 45,000 words, the report is equal parts financial/strategic analysis and round-table discussion with management at Facebook, Google, Kayak, Momondo, and Skyscanner, and industry experts in digital marketing, messaging and chatbots, and hospitality.

What You'll Learn From This Report

  • How Facebook has evolved from a social media company into a platform
  • Why Facebook and Instagram are a strong fit for advertising in travel
  • How dynamic ads for travel work and why they are important
  • Facebook’s advantages in cross-device tracking and conversion attribution
  • Why Facebook will not become an OTA, but metasearch could be an option in the future
  • The mechanics behind advertising on Facebook and Instagram including the types of ads, costs, and strategy that best fit the vast options available
  • Digital advertising market share estimates
  • Why ad dollars continue to move to digital and how large the opportunity is going forward
  • How much the largest online booking sites likely spend on digital advertising and what share goes to Google, and now, Facebook
  • Estimates of total travel industry spending on digital advertising
  • How much market share Facebook is likely to gain in digital travel advertising
  • The unique challenges for Facebook to win market share in travel
  • How Facebook is impacting Google, the online booking sites, hotels, airlines, and in-destination activities
  • What the future likely holds for messaging and chatbots in the travel industry
  • Why we expect messaging to be more evolutionary than revolutionary
  • An understanding of the differences between the leading messaging platforms
  • How we expect Facebook to monetize its messaging platforms
  • The expected use cases for messaging for different parts of the travel industry
  • Why travel is financially and strategically important to Facebook

Executives Interviewed

  • Christine Warner, Travel Head of Industry, Facebook
  • Neasa Costin, EMEA Travel Vertical Lead, Facebook
  • Hugo Burge, CEO, Momondo Group
  • Tore Pein Jensen, Global CMO, Momondo Group
  • Giorgos Zacharia, CTO, Kayak
  • David Low, Developer Advocate, Skyscanner
  • Colin Kim Senior, Manager Paid Growth, Skyscanner
  • Rob Torres, Industry Director Travel, Google
  • Paolo Torchio, VP Digital & E-Commerce, Two Roads Hospitality
  • Fiona Boyce, Director Social Media & Content Marketing, Two Roads Hospitality
  • Jeremy Jauncey, Founder & CEO, Beautiful Destinations
  • Conor Ryan, Co-Founder & SVP North America, SticherAds
  • Martin Soler, Managing Partner, Martin Soler Consulting
  • Frederic Gonzalo, Founder and Owner, Gonzo Marketing
  • Nick Gibbons, Co-Founder & Head of Customer Success, ReFUEL4
  • Vernon Vasu, Co-Founder & CMO, ReFUEL4
  • Volkan Çağsal, Founder & CEO, Adphorus
  • Mat Harris VP, Product, Enterprise Solutions, Sojern
  • Beerud Sheth, Founder & CEO, Gupshup
  • Preethi Kasireddy, Software & UI Engineer, Sapien.ai

List of Figures

  • Travel Industry Facebook Page Data
  • Dynamic Ads for Travel Vs. Dynamic Ads
  • Active Users by Social Platform
  • Social Media Advertising Growth Is Maturing
  • Google and Facebook Share of Digital Advertising
  • Worldwide Digital Advertising
  • Worldwide Digital Advertising Growth Rate
  • Advertising Dollars Vs. Consumer Time Spent on Media Vertical
  • OTA Digital Advertising Spend Trends
  • Travel Industry Digital Ad Spend
  • Google's Travel Revenue
  • Facebook's Travel Revenue
  • Facebook Worldwide User and Engagement Trends
  • Facebook Active Users by Region
  • “Hotels in NYC” Google Search Test Results